Index Ventures!

FUNDING YOUR STARTUP!LONDON COLLEGE OF FASHION!M.A. FASHION ENTREPRENEURSHIP & INNOVATION!

Nina  Faulhaber  @ninafaulhaber  

Index Ventures!

BITS ABOUT ME!

Index Ventures!

Previously Goldman Sachs!

London Women in Venture Capital!

European Venture Capital Network!

Likeminded!

Mentor at Seedcamp, BBCW labs, Front Row I/O!

Speaker at hy! Berlin, Nacue, Start Up Sweden!

Consumer internet, innovation, fashion, fitness, foreign cultures!

!

Index Ventures!

BITS ABOUT INDEX VENTURES!

Founded in 1996 in Geneva!

Offices in London, Geneva And San Francisco!

Currently three Funds: Technology Growth & Venture, Life Sciences >€3bn Capital Raised.!

Exits: Skype, Betfair, Net-a-porter, Moleskine, Supercell, Criteo!

Investments: King.com, Dropbox, JustEat, Sonos, SoundCloud, Squarespace, Zendesk, Shapeways, Viagogo!

Index Ventures!

INVESTMENTS IN FASHION!

FUNDING YOUR STARTUP!

Index Ventures!

WHAT ARE POSSIBLE SOURCES OF CAPITAL?!

FRIENDS & FAMILY

GRANTS

BANK LOANS

ANGELS

ACCELERATORS

INCUBATORS

CROWDFUNDING

SEED FUNDS

VENTURE CAPITAL

PRIVATE EQUITY

STRATEGICS

PUBLIC MARKETS

Does every startup have to raise?!

The answer is NO - not raising is a viable option !

Index Ventures!

BOOTSTRAP!

•  Pull yourself up up by your bootstraps!•  Lots of advantages!

Keep 100% of your equity!Report to no one but yourself!Building for profitability!

•  Once bootstrapped doesn’t mean forever bootstrapped!•  Success stories: Plentyoffish, Native Instruments, 37Signals (at

first), Thrillist (at first), Matches (at first), Github (at first), …!

So, why the hell would I raise?!

Index Ventures!

WHY RAISE OUTSIDE FUNDING?!

Ambition

Global domination is easier with capital and global support!

Growth!

Faster growth enables you to conquer your market ahead of your competitors!

Advice

Building a business can be lonely – investors can act as mentors, sparring partners and helpers!

•  Success stories: Google, Ebay, Amazon, Skype, Facebook, Twitter, Net-a-Porter, …!

Index Ventures!

WHEN TO RAISE?!

IDEA & PROTOTYPE

PRODUCT MARKET FIT

GO TO MARKET

ACCELERATE

ROLL OUT

ROLL OUT FURTHER

HARVEST

Ø  FRIENDS & FAMILY

Ø  SEED

Ø  SERIES A

Ø  SERIES B

Ø  SERIES C

Ø  SERIES D, E, IPO

Ø  IPO OR SALE

You can raise at any stage,

really!!

Index Ventures!

WHAT DOES IT MEAN FOR YOU?!

VALU

E C

RE

ATIO

N

Index Ventures!

WHAT ARE POSSIBLE SOURCES OF CAPITAL?!

FRIENDS & FAMILY

GRANTS

BANK LOANS

ANGELS

ACCELERATORS

INCUBATORS

CROWDFUNDING

SEED FUNDS

VENTURE CAPITAL

PRIVATE EQUITY

STRATEGICS

PUBLIC MARKETS

Index Ventures!

ANGELS!

•  SEIS and EIS!

•  High net worth individuals!

•  Ex-entrepreneurs!

•  Company executives !

•  Your immediate surrounding!

•  Go for people with expertise!

•  Find the fashion-savvy investors!

SEED

Index Ventures!

ACCELERATORS!

•  Foster entrepreneurship and fuel the ecosystem!•  Helping entrepreneurs !

Operationally!Strategically!Product market fit!Partnerships!Making them ‘Investment-ready’!

•  US: Y Combinator, Techstars, AngelPad, …!•  Europe: Seedcamp, Techstars, Entrepreneurs First,

Startupbootcamp, Hub:raum, Startup Sauna, Wayra, Front Row I/O, BBCW Labs, …!

SEED

Index Ventures!

CROWDFUNDING!

•  Advantages MONEY MARKETING MARKET RESEARCH •  Equity crowdfunding:!

Seedrs, Crowdcube, Angellist, …!JOBS Acts!Advantages & disadvantages!

•  “Passion” crowdfuding:!Kickstarter, Indiegogo, …!Advantages & disadvantages!

•  Fashion-specific crowdfunding?!

SEED, AT ANY STAGE

Index Ventures!

SEED FUNDS!

•  Invest almost exclusively in Seed rounds!•  London: Connect Ventures, Episode 1, No 1 Seed, EC1

Capital, Hoxton Ventures, Initial Capital, Jam Jar, …!•  Germany: Point Nine Capital, Project A Ventures, Paua

Ventures, …!•  Nordics: Creandum, Northzone, Sunstone, Open Ocean, …!

SEED TO SERIES A

Index Ventures!

VENTURE CAPITAL FUNDS!

•  Investment strategy!•  Return expectations!

•  LPs!

•  London: Index Ventures, Accel, Balderton, DFJ Esprit, Atlas, Wellington, ProFounders, Octopus Ventures, Notion, …!

•  US: Sequoia, Kleiner Perkins, Benchmark, Andressen Horowitz, USV, Index Ventures, Accel, DFJ, …!

SEED OR SERIES A TO SERIES D

Index Ventures!

FASHION SPECIFIC INVESTORS?!

WHICH ONES CAN YOU THINK OF?!

THE INVESTOR’S VIEW!

Index Ventures!

INVESTOR’S PERSPECTIVE!

•  We have investors, too!!•  High risk, hopefully high return for everyone!•  IRR EXAMPLE!

Invest £15m over time, own 5% of £1bn exit valuation = £50m / £15m = 3.3x return!

•  Trying to find the top 1%!•  We look for portfolio fit!•  Term sheet protections!•  Trust trust trust!

Index Ventures!

BEHIND THE CURTAINS!

INBOUND! CONTACTS! OUTBOUND!DEALFLOW

EVALUATION CALLS & MEETINGS!

RESEARCH & ANALYSIS!

CUSTOMER CONVERSATIONS!

INVESTING TERM SHEET! DUE DILIGENCE! LEGALS!

PORTFOLIO BOARD MEETINGS!

REGULAR CATCHUPS!

RECRUITING HELP!

HELP WITH INTRODUCTIONS!

FURTHER FUNDRAISING ROUNDS!

HELP WITH EXIT!

DISCUSS ROADMAP!

SPARRING PARTNER!

AGREE BUDGETS!

BRAINSTORM! MENTOR!

PORTFOLIO SYNERGIES!

Index Ventures!

HOW TO APPROACH INVESTORS!

•  “Do or do not, there is no try”!- Brad Feld/Jason Mendelson quoting Yoda!

•  Make a list of suitable investors for you – look at their existing portfolio and expertise!!

•  Try to go via your own network – people who know you will be more confident to recommend you to others!

•  Positive references = increases trust!

•  If you can’t find a common contact, send highly customized email and attach a few slides!

Index Ventures!

WHAT IMPRESSES AN INVESTOR!

•  Passion!

•  Product / business model innovation!

•  Large market up for disruption!

•  Teams, who!

Are best to win their respective market!

Capability & drive to build large business!

Get things done!

THE HIGH LEVEL STUFF

Index Ventures!

WHAT IMPRESSES AN INVESTOR!

•  Show your product!

•  Show you can be scrappy!

•  Know your customer inside out!

•  Know your market inside out!

•  Show you’re a team!

THE REAL STUFF

HUSTLER

OPERATOR

HACKER

DESIGNER

DREA

M  TEA

M  

SOURCE: DAVID E., HACKER DOJO

Index Ventures!

HOW TO DO A DEAL!

Presentation Title Date! 28!Section Title!

•  At any time: Think about the future!

•  Amount & valuation: Come up with something that makes sense + give investor the opportunity to get to 20-25%!

Amount: How much cash makes sense for your business now!

Valuation: Benchmark!!

•  Employee option pool: At least 10-15%, depending on your needs!

•  Vesting: Founder vesting and employee vesting for protection!

•  Ordinary shares (EIS investors) vs. preferred shares (VCs)!•  Book recommendations:!

- Raising Venture Capital by Rupert Pearce & Simon Barnes (recommended by our lawyer, so can only be great!)!- Venture Deals by Brad Feld and Jason Mendelson!

!

THE PITCH!

Index Ventures!

BUSINESS PLAN VS. PITCH DECK!

-  Takes ages to get through!-  Many irrelevant facts for initial

evaluation!-  Difficult to differentiate!

+ Visual and easy to flick through!+ Forces you to focus on key messages!+ You can make use of design!

Index Ventures!

ANSWER THE RIGHT QUESTIONS!

Presentation Title Date! 31!Section Title!

What are you doing?!

Who else is doing it?!

Why are you going to win the market?!

How are you going to make money?!

KPIs / how do you track your progress?!

What problem are you solving?!

Index Ventures!

SUGGESTED STRUCTURE!

SUMMARY"

MARKET "

PROBLEM"

SOLUTION = YOUR PRODUCT"

BUSINESS MODEL"

COMPETITION "

BUSINESS PLAN AND ROADMAP"

FINANCIALS + METRICS"

FUNDRAISING"

"

TEAM!"

ß GET PEOPLE INTERESTED!!

ß TOP DOWN / BOTTOM UP!

ß MAIN PART!!!

ß 1-2 SOURCES OF REVENUES!!

ß WHAT, WHEN, WHERE, HOW!

ß PAST METRICS > PROJECTIONS!

ß HOW MUCH $ + WHAT FOR!

ß WE”REHERE!!

Index Ventures!

THE DO’S!

•  Have one presentation to present and one to send!

•  Make sure the problem is clear!

•  Show what you have done!!

Product demo e.g. screenshots, videos, live demos!

Metrics e.g. users, KPIs, engagement!

•  Show how you will get users!

•  Show how you can get to positive unit economics!

•  Show how you can get to scale!

Index Ventures!

THE MEETING!

•  Know who you’re pitching to!

•  Pitch your problem first!

•  Bring your most important stuff first!

•  Interactive session: React to your audience!

•  Make sure your demo works!

•  Have some questions!

•  Leave an impression!!

Presentation Title Date! 34!Section Title!

CASH IN THE BANK – AND NOW?!

VALUE CREATION

•  Increase users!

•  Increase engagement!

•  Increase productivity!

•  Increase revenues!

•  Increase margins!

NOW IT’S ALL ABOUT!

Year 1! Year 2! Year 3! Year 4! Year 5!

CASH BURN PHASE!

BREAK EVEN!

AS SIMPLE AS THAT!

CASH!

COST!

REVENUES!

Index Ventures!

COMMON USES OF FUNDS!

•  Hiring hiring hiring!

•  Development = product!!

•  Building out sales functions = customers!!

•  Marketing = customers!!

•  Internationalization!

•  Potentially acquisitions!

Index Ventures!

CONTROL YOUR FINANCES!

•  Set targets!

•  Track KPIs including unit economics!

•  Track P&L versus budget!

•  Keep an eye on cash burn and run rate – prepare for potential further fundraises!

Index Ventures!

ALWAYS REMEMBER!

Make sure you keep figuring out!

•  Product market fit – test iterate test!

•  Viable product – test iterate test!

•  Viable customer segment – test iterate test!

•  Unit economics – make them work before you scale!

THEMES IN ONLINE FASHION TECH!

Index Ventures!

WAVES OF FASHION TECH!

FIRST WAVE!

STRAIGHT FORWARD E-COMMERCE!

e.g. NET-A-PORTER, ASOS, AMAZON, ZALANDO!

SECOND WAVE!

FLASH SALES, LEAD GEN, CURATION, ONLINE-OFFLINE, …!

e.g. ZULILY, THE FANCY, BONOBOS, MATCHES.COM, …!

THIRD WAVE!

PERSONALIZATION, DATA, PEER-TO-PEER, WEARABLE TECH, …!

e.g. TRUNK CLUB, EDITD, POSHMARK, JAWBONE, …!

Index Ventures!

MARKETPLACES!

Presentation Title Date! 43!Section Title!

u  Etsy!

u  Farfetch!

u  Not On The Highstreet!

u  Vestiare Collective!

u  Shapeways!

u  Joor!

u  Botticca!

u  StreetHub!

Index Ventures!

BRANDS!

Index Ventures!

DATA!

Index Ventures!

PERSONALIZATION!

Index Ventures!

WEARABLE TECH!

Index Ventures!

THANKS!!email nina.faulhaber@indexventures.com!twitter @ninafaulhaber!!